• Friday, June 14, 2024
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BusinessDay

Crypto-obsessed Nigerians reel as FTX collapses

FTX  global footprint boosts revenue 1000% high

The collapse of FTX, one of the world’s largest cryptocurrency exchanges, has left Nigerians trading on the platform reeling in losses.

The FTX announced last weekend that it had commenced a voluntary proceeding under Chapter 11 of the United States Bankruptcy Code in order to begin an orderly process to review and monetise assets for stakeholders’ benefit.

An estimated $1 billion worth of customer funds vanished from the failed crypto exchange, according to a Reuters report.

BusinessDay reported earlier this month that the number of Nigerians who owned cryptocurrencies had increased this year despite the downturn in the market in recent months.

Finder’s latest report on cryptocurrency ownership and adoption shows that Nigeria has the second-highest number of Bitcoin owners as of October at 48 percent, up from 16.1 percent in the same month last year. Australia sits atop the table, with 61 percent of crypto owners holding Bitcoin, the world’s most popular cryptocurrency.

In August, Nigeria emerged as the most crypto-obsessed nation in the world based on the increasing number of Nigerians searching the Internet for crypto-related trading, according to CoinGecko, a crypto price tracker.

Read also: Why Nigerian youths prefer crypto, others to local stocks
Crypto investors and analysts who spoke with our correspondent said FTX’s collapse would affect many Nigerian crypto traders because FTX is one of the biggest trading platforms in the world.

“I have reconciled myself with losing the money with FTX but the most painful thing wasn’t the money. It was the faith that was shattered,” said Victor Asemota, a Nigerian tech entrepreneur and investor who identified himself as ‘FTX Shitcoin BagHolder’ on Twitter.

“This FTX thing sinks slowly. Looking at the app, I have never been this helpless. I now understand why people went to failed banks to collect their cars, furniture, and generators. Maybe they should settle African customers with stakes they had in start-ups.”

Dozie Ulor, a cryptocurrency trader and investor, said a lot of Nigerians traded with the platform and have been left with nothing following the collapse of FTX.

“A lot of Nigerians were trading and also saving money on the platform. I once used the platform. Most Nigerian youths keep BTC, USDT, Etherium there just like Binance,” he said. “Now, it has crashed and all is gone. I have a friend that works with them. He is FTX senior marketer in Africa and earns 2.3million Naira monthly.”

According to Ulor, the sad part is that he gets his salary through FTX wallet and does not save in naira. “So he stores most of his salaries there and now the platform has crashed and his seven months’ salary is gone,” he said.

Ulor said that many Nigerians trusted the platform because of its stability.

“The bankruptcy affected both those who traded and those holding coins with the platform. The coin is called the FTX token. It dropped badly from more than $20 to less than $1.5 now,” said Emma Onyema, a crypto investor.

“When the saga came up, the company paused withdrawals till now and all of them lost their money because the company is now empty.”

According to Onyema, Nigerians who also staked in future trading in the platform have also lost both their amount of stake and value that would have accompanied them if they eventually won in the future.

He said many Nigerian youths would be at a loss because the platform gave room for many opportunities that Nigerian crypto enthusiasts leveraged.

The exchange was also involved in future trading. “It is also called leverage trading which comes in the form of gambling. People make analyses, which could go positive or negative,” Onyema said.

“You get value for your stake when the prediction is right and lose when it goes the other way round. It’s more like crediting the winner with the loser’s stake.”

Explaining how it works, the investor said, “ it’s more like predicting that this time is going up or down just like a bet.

“When you predict any coin going up for instance and it goes high as predicted, you will get paid with the money staked by those that predicted it going low. At that point, if you don’t take profit, that’s a loss for you.”

Raphael Idu, a financial market analyst at CT Traders, said many people who were up to date with the market were able to withdraw their money from the platform when the news about FTX broke while those who doubted the possibility of FTX going bankrupt did not make the move and have lost all they have.

Idu emphasised that the only way to be saved from the crypto market is to follow the news and know when your funds are at stake.

“When the rumour came, some of the smart ones were able to pull out their money before they closed the site from withdrawal. So those that didn’t make that smart step will be regretting it by now. As a crypto expert, trader or investor, what keeps your money safe is getting accurate news at the right time. If you don’t follow the trend, you stand the risk of loss at any point,” Idu said.